Tag: Office of Financial Management

Today, the Washington state Economic and Revenue Forecast Council (ERFC) released their February revenue forecast. The projected General Fund-State (GF-S) revenue forecast for the 2017-19 biennium increased by $647 million. Projected revenue collections for the 2019-21 biennium have also increased by $671 million. According to the Governor’s Office of Financial Management (OFM), this forecast is the “largest quarterly increase for the state since before the Great Recession.”

Here is a quick summary of the total projected GF-S revenue for each biennium:

• $44.213 billion for the 2017-19 biennium, 15.4% more than that of the 2015-17 biennium.
• $48.253 billion for the 2019-21 biennium, 9.1% more than expected 2017-19 biennial.
• The initial forecast for the 2021-23 biennium is $51.932 billion, an increase of 7.6% over that of the 2019-21 biennium

Behind the numbers:

• Cumulative major General Fund-State (GF-S) revenue collections from November 11, 2017 through February 10, 2018 were $185 million (3.5%) higher than forecasted in November.
• The Washington economy saw strong housing construction and home price appreciation. Cumulative real estate excise taxes (REET) came in $44 million (21.1%) higher than forecasted. Projected property tax receipts are also 3% higher than expected.
• For the first time in nearly three years, Washington exports increased (0.6%) in the fourth quarter of 2017.
• The forecast anticipates continued but slowing growth in employment (2.2%) and personal income (4.6%). Disposable personal income is also higher than assumed (5.0%) than November because of federal tax cuts.

We expect that the majority leadership in the House and Senate will release budget proposals early next week. Stay tuned to the OPBlog for updates!

Today, the Washington state Economic and Revenue Forecast Council (ERFC) released November revenue forecast. The forecast increased projected General Fund-State (GF-S) revenue for the 2017-19 biennium by $304 million. Projected revenue collections for the 2019-21 biennium have also increased by $186 million. These new projections show a slight increase from the September revenue forecast.

Here is a quick summary of the total projected GF-S revenue for each biennium:

• Final GF-S revenue collections for the 2015-17 biennium, which ended June 30, 2017, were $38.317 billion, an increase of 13.8 percent over the 2013-15 biennium ($6 million higher than what was estimated in September 2017).
• $43.566 billion for the 2017-19 biennium, 13.7 percent more than the 2015-17 biennium.
• $47.582 billion for the 2019-21 biennium, 9.2 percent more than the 2017-19 biennium.

Behind the numbers:

• Cumulative major GF-S revenue collections from September 11, 2017 through November 10, 2017 were $119 million (3.9%) higher than forecasted in September.
• Forecasted personal income in Washington is slightly higher than September.
• The forecast attributes most changes in revenue to property taxes. Under legislation passed in the 2017 special sessions, property taxes for the next four years will increase by a new formula that will lead to more revenue collection.
• Similar to the September forecast, concerns cited in this forecast include slow U.S. economic growth, weak labor productivity growth, and international trade concerns.

This is the last revenue forecast of the year. Governor Jay Inslee will use the November revenue forecast to craft his 2018 supplemental budget proposal (amending the 2017-19 biennial budget), which is expected to be released in December. Stay tuned to the OPBlog for updates on the Governor’s budget proposal when it is released.

Last month, the Economic and Revenue Forecast Council (ERFC) released their September revenue forecast, the first forecast of the current fiscal year. The forecast increased projected General Fund-State (GF-S) collections by $279 million for the current 2017-19 biennium and $243 million for the upcoming 2019-21 biennium. These increases are on top of increases projected in the June revenue forecast.

Here is a quick summary of the total projected GF-S revenue for each biennium:

• $38.311 billion for the 2015-17 biennium, 13.8 percent more than the 2013-15 biennium
• $43.262 billion for the 2017-19 biennium, 12.9 percent more than the 2015-17 biennium
• $47.396 billion for the 2019-21 biennium, 9.6 percent more than the 2017-19 biennium

Behind the numbers:

• The forecast is similar to the June forecast, but with slightly higher revenue projections. Most of the extra collections are projected to occur in the current biennium, which began on July 1, 2017.
• The forecast attributes most changes in revenue to legislation that was passed in 2017 session, after the June forecast. The largest increases came from an increase to the state property tax levy for basic education and from an extension of retail sales and B&O tax liability to more categories of online sales. The legislature also repealed a sales tax exemption for bottled water. These legislative changes accounted for an additional $2.4 billion in the current biennium.
• Similar to the June forecast, concerns cited in this forecast include slow U.S. economic growth, weak labor productivity growth, and international trade concerns.

As a reminder, there will be one more forecast in November, on which the Governor will base his proposed 2018 supplemental budget (amending the enacted 2017-19 biennial budget).

Stay tuned to the OPBlog for updates on revenue forecasts and the upcoming 2018 legislative session.

Earlier today, the Economic and Revenue Forecast Council (ERFC) released its June revenue forecast, which increased projected General Fund-State (GF-S) collections by $81 million for the current 2015-17 biennium and by $87 million for the upcoming 2017-19 biennium. These increases are on top of the more significant increases projected in the March revenue forecast.

Here is a quick summary of the total projected GF-S revenue for each biennium:

• $38.308 billion for the 2015-17 biennium, 13.8 percent more than the 2013-15 biennium
• $40.903 billion for the 2017-19 biennium, 6.8 percent more than the 2015-17 biennium
• $43.875 billion for the 2019-21 biennium, 7.3 percent more than the 2017-19 biennium

Behind the numbers:

• The forecast is similar to the March forecast, but with slightly higher revenue projections.
• The forecast attributes these changes to slightly lower personal income growth but slightly higher residential building permits.
• Similar to the March forecast, concerns cited in this forecast include slow U.S. economic growth, weak labor productivity growth, and international trade concerns.

This is the final revenue forecast before the end of the biennium. The legislature will soon enter the third special session of the year, and budget negotiators in the Senate and House will use this updated forecast of 2017-19 revenues as a baseline for their final budget compromise.

If state lawmakers are unable to pass an operating budget by June 30, the state government will enter a shutdown. The University of Washington is preparing for this possibility and has been in touch with the Governor’s Office of Financial Management (OFM) regarding contingency planning and possible implications for university operations. All agency contingency plans, including the UW’s, are available on the OFM website here.

Stay tuned to the OPBlog for updates on the final budget compromise when that is available.

Earlier today, the Economic and Revenue Forecast Council (ERFC) released its March revenue forecast, which increased projected General Fund-State (GF-S) collections by $247 million for the current 2015-17 biennium and by $303 million for the upcoming 2017-19 biennium. These increases are on top of the increases projected in the November revenue forecast.

Here is a quick summary of the total projected GF-S revenue for each biennium:

• $38.227 billion for the 2015-17 biennium, 13.5 percent more than the 2013-15 biennium
• $40.817 billion for the 2017-19 biennium, 6.8 percent more than the 2015-17 biennium
• $43.842 billion for the 2019-21 biennium, 7.4 percent more than the 2017-19 biennium

Behind the numbers:

• The forecast largely attributes the higher projections to increases in retail sales tax and Real Estate Excise Tax (REET) collections.
• The forecast includes slightly stronger personal income and employment growth than were projected in November
• Concerns cited in the forecast include slow global and U.S. Economic Growth, weak labor productivity growth and uncertainty regarding fiscal and trade policy.

Any excess revenue collected in the 2015-17 biennium will contribute to reserves that will be available as one-time funds to spend in the 2017-19 biennium. Budget writers in the Senate and House will use this updated forecast of fund balance and projected 2017-19 revenues as a baseline for their budget proposals, which are expected to be released within the next couple weeks. During today’s meeting of the Economic & Revenue Forecast Council, Senator Braun and Representative Ormbsy (chairs of the Senate Ways & Means Committee and House Appropriations Committee, respectively) discussed that overall, this revenue forecast is positive news and will be used to make final adjustments to each of their budget proposals.

The state continues to face significant budgetary challenges, largely due to required investments in K-12 education. Governor Inslee’s operating budget proposal, released in December, included over $4.4 billion in new revenue to help invest in K-12 education. Stay tuned to the OPBlog for updates on budget proposals as they are released by leadership in the House and Senate.

On Wednesday, the Washington state Economic and Revenue Forecast Council released its November revenue forecast, which projected a slight increase to General Fund-State (GF-S) collections over the September revenue forecast. The GF-S revenue forecast increased by $215 million for the current 2015-17 biennium and $137 million for the 2017-19 biennium.

• Final GF-S revenue collections for the 2013-15 biennium were $33.666 billion.
• Total projected GF-S revenue for the 2015-17 biennium is now $37.980 billion, 12.8 percent more than the 2013-15 biennium.
• Total projected GF-S revenue for the 2017-19 biennium is now $40.514 billion, 6.7 percent more than the 2015-17 biennium.
• Total projected GF-S revenue for the 2019-21 biennium is now $43.656 billion, 7.8 percent more than the 2017-19 biennium.

Behind the numbers:

• The forecast attributes the higher projections due mainly to increases in retail sales tax and Real Estate Excise Tax (REET) collections.
• The forecast includes slightly stronger personal income and employment but lower housing permits.
• Concerns cited in the forecast include slow global and U.S. Economic Growth, weak labor productivity growth and uncertainty regarding fiscal and trade policy.
• Washington state employment is up by 13,500 net new jobs in September and October.

According to an article in the Tacoma News Tribune, this additional tax revenue will contribute to a 2017-19 state budget that is expected to be more than $40 billion. David Schumacher, Director of the Governor’s Office of Financial Management, stated that this increase in revenue “always helps, but it doesn’t solve the huge problems we’re facing.” One of the biggest problems Schumacher referred to is the Washington state Supreme Court’s mandate to increase K-12 education spending (McCleary v. State of Washington). While there is current debate about the estimated cost of complying with McCleary, the most commonly cited estimate is approximately $3.5 billion, and in Schumacher’s opinion “there’s broad agreement that we’re that neighborhood.”

Governor Jay Inslee will use this revenue forecast and estimates for complying with McCleary when crafting his state budget proposal, which will be released in mid-December in advance of the 2017 legislative session. Stay tuned to the OPBlog for updates on the Governor’s budget proposal when it is released.